Infosys has approved a share buyback of up to Rs 9,200 crore at a maximum price of Rs 1,750 per share. The move is likely to benefit investors. The company has also announced its results for the quarter ended March 2021. Here is all you need to know:
The approval confirms the third share buyback by the company in the last five years. In 2017, the company conducted its first buyback of shares, returning Rs 13,000 crore to investors at Rs 1,150 per share. Infosys conducted its second buyback in 2019 at Rs 800 per share.
WHAT IS A BUYBACK?
A buyback is an option for repurchasing free-float equity shares of a company by promoters. The company pays its shareholders a fixed value per share and takes back equity shares, which were distributed among public and private investors, as part of its ownership.
It may be noted that the buyback is beneficial for investors as the company pays a higher price for equity shares than the market value.
There are various reasons why companies opt for buybacks including plans to consolidate ownership, increasing key financial ratios and strengthening company finances.
Q4 RESULTS SLIGHTLY WEAKER
Infosys has reported a 2.3 per cent quarterly decline in consolidated profit at Rs 5,076 crore for the quarter ended March 2021. While the performance was a result of weak margin performance, its consolidated profit was supported by strong revenue growth.
The Bengaluru-based company’s consolidated revenue from operations grew 1.5 per cent on a quarterly basis to Rs 26,311 crore. Infosys said, “Consolidated revenue in constant currency grew by 2 per cent and the topline growth in dollar terms was at 2.8 per cent quarter-on-quarter.”
Meanwhile, the company dollar revenue growth increased to $3,613 million in the March 2021 quarter, compared to $3,516 million in the previous quarter.
Salil Parekh, CEO and MD, Infosys, said, “We have crossed a milestone of Rs 1,00,000 crore in revenue in FY21. Our intense focus on client relevance, growing our digital portfolio with differentiated capabilities like Infosys CobaltTM, and empowering employees have helped us emerge as a preferred partner-of-choice for our global clients.”
He added that a strong momentum exiting FY21 besides focus on strategy to accelerate digital businesses helped the company’s performance.
It is worth noting that Infosys has maintained its revenue growth guidance in constant current at 12-14 per cent for FY22 while retaining the EBIT margin growth forecast for the full year at 22-24 per cent.
The company’s operating profit declined 2.3 per cent on a Q-o-Q basis to Rs 6,440 crore in the quarter ended March 2021. The company also confirmed that its margin contracted 90 bps sequentially to 24.5 per cent during the quarter. It also added that operating expenses increased 5.7 per cent Q-o-Q to Rs 2,707 crore in Q4FY21.